Legh v Nungu Trading 353 (Pty) Ltd and Another

John Alistair Legh and Gregory Porteous each acquired 50% of the shares and loan accounts in Rietfontein General Galvanisers (Pty) Ltd. The company owned a single immovable property and conducted no business. Municipal rates and charges remained unpaid for years, leading to a default judgment and a sale in execution. The property was sold for R100 to Nungu Trading 353 (Pty) Ltd, subject to substantial outstanding municipal charges. Shortly before transfer, Porteous and others, and thereafter Legh, launched winding-up proceedings. The company was provisionally wound up. Nungu intervened, contending it was entitled to transfer of the property despite liquidation, relying on s 20(1)(c) of the Insolvency Act as applied via s 339 of the Companies Act. The High Court upheld the winding-up but declared Nungu entitled to transfer. Legh appealed against that declaration.

The appeal was upheld with costs; the cross-appeal was dismissed. The order of the High Court was set aside and replaced with an order confirming the final winding-up of the company and dismissing Nungu’s intervention application with costs.

The case authoritatively clarifies that s 20(1)(c) of the Insolvency Act does not apply to companies in liquidation and that execution processes cannot continue once winding-up intervenes. It reinforces the principle of concursus creditorum and protects the statutory scheme governing liquidation of companies.